Inter-Organizational Power within Family Business Group: Impact on New Venture Creation

The purpose of this paper is to examine the impact of family business group (FBG) heterogeneity on new venture creation in India. Using a multiple regression model, this study examines the moderating effect of FBG heterogeneity (relative size, relative profit, and relative market share) on FBG size and new venture creation relationship in a sample of 8344 new projects initiated by 526 Indian FBG firms. We find that, bigger FBG firms on average have higher positive impact on new venture creation. Moreover, FBG firms that have higher relative profit or higher relative size are able to enhance the positive impact of FBG size on new venture creation. Finally we also found that FBG firms within bigger groups that have higher relative market share are able to execute higher number of new ventures, but are conservative in terms of the size of projects undertaken. This study adds to literature on the strategic choices adopted by family firms as too little is known about the effect of family business group heterogeneity on new venture creation in emerging markets such as India.